Since 1990, lifetime per patient costs for the treatment of AIDS have been estimated from $38,000 to over $120,000 for the United States as a whole. With the development of new antiretrovirals, the costs of treatment may become even higher in the future. These estimates suggest that the treatment costs for AIDS can decimate the financial resources of infected persons and force them to rely on public resources through state Medicaid programs. In an attempt to meet the challenge of providing adequate medical care to an increasing number of persons with AIDS (PWA), some state Medicaid agencies have implemented an AIDS-specific home and community-based waiver program. The waiver initiative allows state Medicaid programs to provide home and community-based to beneficiaries with AIDS who are at risk of institutionalization as an alternative to traditional, hospital-based care. Although 14 states have implemented such programs, evaluations as to their impacts on access, use of services and expenditures are rare. Our own published research of the Florida waiver program found that home and community-based care resulted in 22-27% lower expenditures per beneficiary compared to other PWA (Anderson and Mitchell, 1997). No prior research, however, has examined why such cost differences exist. The purpose of this research is to examine if there cost differences can be attributed to differences: 1) in the types and qualities of services received, 2) the development of potentially preventable diseases, such as pulmonary tuberculosis, and 3) survival. To evaluate these issues we will construct a longitudinal analysis file from Florida Medicaid claims for PWAs spanning the period 1989 through 1996.